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Editor's PickUK firm rolls out billion-dollar Islamic PE fund to capitalize on Islamic...

UK firm rolls out billion-dollar Islamic PE fund to capitalize on Islamic and ethical innovations

A UK-based entity, backed by international investors, is setting up a US$1 billion fund to invest in Islamic and ethical financial innovations, underscoring the swelling interest in Islamic fintech and Shariah finance.

Launched by Ethos Invest, the new fund is known as the Financial Services & Technologies Fund. It will invest in emerging innovators in financial services including banking, asset management, payments and technology areas such as blockchain, robotics, artificial intelligence, cybersecurity, life sciences and healthcare, among other verticals. Majority of the capital will be deployed in the UK with additional investments in Europe, Saudi Arabia and the wider MENA region, Southeast Asia and North America.

The wide geographic focus is in line with Ethos Invest’s team profile: the firm has formed a team of investment professionals that includes Saudi Arabia’s Alinma Investment Company, Canada-headquartered BMO Global Asset Management’s private equity (PE) team and Vistra who will serve as the Jersey-domiciled PE fund. Abdullah Medallah & Co serves as the fund’s legal counsel.

“The Ethos team is excited to launch this fund which represents a real milestone for Islamic and ethical finance in the UK and around the world. SMEs with strong ethical credentials are vital as we look towards a brighter future for the global economy, and ensuring that these companies have access to capital is key,” Dr Quintan Wiktorowicz, a partner at Ethos Invest, shared. “The fund will ensure that this is taking place, especially in the financial services and wider technology spaces, and we look forward to partnering with many exciting businesses.”

Ethos Invest, a young firm incorporated in 2020, is currently fundraising for the fund, and plans to expand its fund portfolio across different sectors. It is also working on establishing digital banking and wealth management offerings.

Should it reach its US$1 billion target, the fund would be the largest Islamic PE fund. Currently, the largest Islamic PE fund is owned by Malaysia’s Employee Provident Fund, a US$600 million direct/co-investment separate management account fund managed by BlackRock, HarbourVest Partners and Partners Group.

Worth over US$3 trillion by some estimates, Islamic finance is gaining mainstream recognition, particularly as being part of the burgeoning ethical and impact finance industry, which has caught the attention of conventional fund managers.

“We are delighted to be involved in the Ethos Fund, which will provide exposure to a well-diversified private equity portfolio for a large and underserved market for whom this has been previously inaccessible. The ethical and Sharia compliant goals of the fund, and the resulting portfolio of investments thereof, will be a natural extension of BMO Global Asset Management’s well-established ESG-oriented investment approach,” shared Hamish Mair, MD and Head of Private Equity at BMO Global Asset Management.

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